Coinbase and other top cryptocurrency exchanges have decided to set up a Crypto Rating Council, to help crypto companies comply with U.S. securities law.
In a blog post, Coinbase revealed that it is co-founding the Crypto Rating Council. A member organization designed to assist crypto companies to determine if they comply with the current U.S. federal securities law.
The Council includes seven other firms: Anchorage, Bittrex, Circle, DRW Cumberland, Genesis, Grayscale Investments, and Kraken. These companies include digital asset trading platforms, digital custodians, trading firms and more.
The post stated: “In the coming months, we expect to add more members and review more assets. As well as, publish more revised asset scores. As we continue to grow, we may develop similar tools for non-U.S. jurisdictions.”
This is a step in the right direction as before now U.S. Congressman, Bradley Sherman called for a bill that would ban cryptocurrency purchases by Americans. However, at the moment, Bitcoin and blockchain are expected to be among forerunning topics for the 2020 U.S. Presidential election campaigns. Therefore, the rating council could serve as a reference body for the industry.
How it works
The rating is a score between 1 and 5. The Council will analyze the factors and deliberate.
A score of 1 means the asset has little or no characteristics of a traditional regulated security. While a score of 5 indicates that the asset has many such characteristics.
The Council will assess most assets that members support or use from time to time in their businesses. Accordingly, the ratings will change occasionally and feedback will also be accepted. The project will help understand the practice of applying the federal securities laws.
Independence for the council
The Council is allowed to carry out its ratings independently and isn’t endorsed by bodies like the SEC (who isn’t a big believer in crypto), CFTC, or any other government agency.
However, the Council will often seek input from development teams.
Feel free to see the ratings of some assets here.